I am very pleased to join you today to assist you in your work in relation to foot and mouth disease.

Clearly, the decision of Parliament to establish the committee has its origins in the major outbreak of the disease in the EU last year. That crisis has now passed. The last outbreak was on 30 September 2001. All four affected Member States have regained their disease free status under the OIE. The consensus on the non-use of prophylactic vaccination remains intact.

However, it would be a very serious error to judgement to believe that the book is therefore closed on the crisis. The sheer scale, cost and impact of the crisis call for a fundamental review of our existing approach towards major animal diseases.

In particular, we have to assume that further outbreaks of FMD are a distinct possibility. This requires us to ensure that the necessary legislative framework and contingency plans are in place to deal with such outbreaks.

The work of this committee will play an instrumental role in this process. Parliament took a keen interest in the Commission's handling of the EU dimension to the crisis last year. I appeared before the Plenary and the Agriculture Committee on a number of occasions to explain the Commission approach.

The time is now opportune for a deeper assessment of what happened and what can be done to ensure that it does not happen again. I look forward to assisting you with your work in this respect.

I have already received your comprehensive questionnaire on the key issues you wish to examine in relation to the Commission's role in relation to FMD. I do not intend to answer these questions in detail today. Instead, I intend to focus on the key political issues which clearly emerge from your questions.

A detailed written response to your questions will follow in the next few days. I intend, if you agree, to also clarify any additional issues which arise today in this written response.

Turning, therefore, to the main issues, I would identify the following as the principal concerns of Parliament which emerge from your questionnaire:

The origin of the outbreak and the level of preparedness;

Vaccination;

The stamping out policy in the event of outbreaks;

The performance of individual Member States in dealing with the outbreak;

The environmental implications of mass animal carcass disposal;

The costs and economic impact.

Origin and Level of Preparedness

The indications point towards the illegal use of swill, containing contaminated animal material, as the origin of the disease. This material could only have been illegally imported to the EU. There is an obvious need to look again at controls at imports in the light of this illegal import.

Swill feeding has also been banned in 13 of the 15 Member States. There is an argument that swill feeding, under properly controlled conditions, is safe. This is of course true. However, the majority of Member States are not prepared to take this risk in view of the catastrophic consequences of a failure of controls.

The issue remains unresolved. An EU wide ban on swill feeding is scheduled to come into effect on 1 November. However, Parliament recently voted an amendment in its opinion on the Council's common position on Animal By-Products which would allow for its continuation. Conciliation now appears inevitable on this sensitive subject.

Irrespective of the origin, the consequences were devastating, especially for the United Kingdom. The epidemiological evidence now suggests that there were more than 50 outbreaks before the virus was first discovered.

Moreover, it is now evident that the subsequent outbreaks in France, the Netherlands and Ireland all had their origin in animal movements which took place before this discovery. The reality is that from the very first moments the authorities, especially in the UK, faced a monumental task in eradicating the outbreak.

All Member States were required to have a contingency plan in place to deal with potential outbreaks of FMD. These plans were reviewed and approved by the Commission. Nonetheless, nobody envisaged an epidemic on a scale of over 2000 outbreaks. This was considered unthinkable, especially on an island Member State considered especially well positioned to keep out the virus.

I have also noted more than once that perhaps the pre-occupation with BSE over-stretched veterinary services. Certainly, any proposal to strengthen measures in relation to FMD before the last year's outbreak would have been considered a diversion from the political priority attached to BSE.

Vaccination

Frankly, there is not a lot I can add to what I have already said on vaccination. I addressed the issue in considerable detail at the International Conference on FMD which took place in December. But, because of the importance and sensitivity of the issue, let me summarise the Commission position on vaccination.

First and foremost, the Commission did not follow a non-vaccination policy throughout the outbreak as is sometimes, falsely, alleged. The Council Directive provides for emergency vaccination and the Commission maintained a bank of 39 million doses of antigen for potential formulation into vaccine. This included 10 million does for the O 1 strain.

More importantly, the Commission agreed the conditions for emergency vaccination in both the Netherlands and the United Kingdom on the basis of the existing Directive. We also signalled agreement in principle to Belgium and Germany but neither Member State followed through with formal requests.

Second, it is not credible to suggest that prophylactic vaccination should have been carried out. There were suggestions that the crisis could have been avoided through such a generalised vaccination of the livestock population. It was equally suggested that it was a mistake to abandon the possibility for such an approach in 1991.

This is of academic interest only. The fact is that the Member States collectively agreed at that time that vaccination should serve only as a tool to eradication of FMD. I have seen little to suggest that they were wrong. It is simply not credible that the entire population of susceptible livestock should have been inoculated. I have not heard any convincing arguments to suggest that the Member States were wrong with this approach.

It is already significant that the conclusions of the International Conference on FMD held in Brussels in December were very cool towards such an approach.

Third, the Commission cannot impose vaccination on a Member State. The legislation simply does not allow the Commission to make such an imposition. The Commission role is to ensure that if Member States do decide to have recourse to vaccination that it is done with due regard to the relevant EU legislation and to the wider interests such as trade.

Thus, in the course of the outbreak, the Commission ensured that there were regular discussions with the veterinary experts of the Member States on the approach towards vaccination. In addition, the situation was also regularly reviewed in the Agriculture Council, in the European Parliament and indeed in the European Council itself.

The consequences of not following such an approach are clear. If any Member State unilaterally introduced vaccination, other Member States and third countries would immediately impose restrictions to preserve their own disease-free status.

Its introduction within an EU framework is the only sensible approach. It was this, for example, which allowed the Netherlands to continue its huge pigmeat exports with a minimum of disruption throughout its outbreak.

Whatever the views of individuals, there was a clear consensus in all the Institutions of the EU that the Commission approach was correct. Quite correctly, however, there was an equally strong consensus that the approach should be reviewed when the outbreak was eradicated. This is what is now happening.

Fourth, of course our approach towards vaccination has to be reviewed, particularly in the light of new and more effective vaccines. The Commission will actively support such a review both at the EU level and in the relevant international bodies like the OIE.

However, we should not allow our enthusiasm for more effective vaccines cloud our judgment. Instead, they must be properly researched, validated and accepted for use at the international level. FMD is too dangerous to allow fundamental changes in approach which are taken in haste.

I look forward to your own discussions on this issue, therefore, with the OIE and indeed with countries like Argentina and Brazil where vaccination continues to be used, but only as a tool towards the objective of eradicating FMD.

Culling of Animals

Unquestionably, the most disturbing aspect of the outbreak was the slaughter and destruction of large numbers of livestock. We need no reminding of the horror provoked by the burning pyres of animals slaughtered in the United Kingdom.

This destruction was indeed difficult to defend before public opinion in the countries concerned. The proposition that this process was unnecessary and could be avoided through vaccination did not help.

Again, the Commission position is clear. Culling of infected animals and in contact animals is a clear requirement of the current approach towards FMD. It is also the approach recommended by the OIE.

There is no support for a departure from this policy. Infected animals, even when fully recovered from the disease, remain potentially infective. It is too big a risk not to slaughter and destroy such animals. This is true also of animals with which they may have been in contact.

If there can be no argument over the slaughter these animals, the case for slaughter of contact animals is more controversial. However, the experience is that decisive action to stamp out herds or holdings where FMD is suspected remains the most effective action in stamping out the disease.

This was the experience even in the course of the most recent outbreak. Both France and Ireland took very decisive action to stamp out infected holdings and suspected holdings. In both cases this policy was highly effective.

Late last week, the Irish authorities published a comprehensive analysis of their FMD outbreak. This study estimated the cost in Ireland at 0.2% of GDP. However, the same study estimated that a widespread outbreak of FMD would have reduced GDP by between 1% and 5%. In this context, the measures taken by the Irish authorities to eradicate the outbreak were both prudent and worthwhile.

A similar conclusion can be made in France where the approach was to stamp out its two outbreaks.

The Netherlands is drawing its own conclusions on its experience. But, the hard reality is that painful as the outbreak may have been, it still fell very far short of the outbreak of swine fever in 1997. One of the major lessons of the 1997 outbreak was that the suspension of the preventive killing of suspected holdings resulted in a massive spread of infection.

This was subsequently identified as a major mistake in the reviews of that outbreak. Clearly, this was a factor in the policy approach followed last year by our Dutch colleagues. The decision was taken that the slaughter and destruction of infected animals and suspected infected animals was the best action to eradicate the outbreak and restore the country's disease free status.

This extended to the destruction of vaccinated animals even though the possibility to use the products of these animals for human consumption existed. Perhaps the resulting delay in regaining a disease free status, without vaccination, was considered too high a price to pay.

In the United Kingdom, it is also clear that solid progress in eradicating the outbreak only began with the effective implementation of the so-called 24/48 hour rule. That is to say, once infected holdings were slaughtered within 24 hours and suspected holdings within 48 hours.

The UK experience is of course the subject of a number of on-going reviews. It is notable that the Department of Environment, Food and Rural Affairs (DEFRA) continues to defend its culling approach in its official contribution to the "Lessons Learned" Inquiry being carried out by Professor Anderson.

Tomorrow, both Nick Brown and Dr Scudamore, the UK Chief Veterinary Office, will be appearing before you where I am sure that this issue will be a focus of your attention.

Mme President, you have also directed a number of questions to the Commission in relation to the arrangements for the destruction of the huge number of animals killed during the outbreak. The fact is that this proved only to be a major problem in the UK.

The other Member States concerned were able to find the destruction capacity without, for example, the use of pyres. The UK clearly had a much greater problem which required the army's intervention. Again, this is an issue which is best left to your discussions tomorrow.

Nonetheless, I do believe that there is a need for Member States to build into their future contingency plans scenarios for large scale carcass disposal. It is already clear from the existing problems with the destruction of meat and bone meal that there is a need for a fundamental review of disposing of such products.

Budget

You have put a wide range of questions to the Commission regarding the budgetary implications. As I pointed out earlier these will be replied to in detail in writing. Permit me, however, make a few general observations.

The expenditure involved is potentially very, very considerable. Last year alone, over €420 million was paid by the Commission towards the costs incurred. A broadly similar amount has been budgeted for this year to deal with the remaining costs. This expenditure will be overwhelmingly directed towards the UK for obvious reasons.

I want to assure you that the interests of the European taxpayer will be ensured. The Commission is carrying out a very comprehensive examination of all claims for co-financing of the measures introduced in the relevant Member States. This is based on a number of on-the-spot inspections by our audit staff, including a week long visit to Cumbria, the worst affected region, last week.

The findings of the reports of the Food and Veterinary Office will also be taken into account. Later this afternoon, you will have an opportunity to discuss with Mr Hutchins of the FVO these reports and their findings. I might also mention that the Court of Auditors is also carrying out a report on the outbreak.

All payment decisions will also be fully discussed with the Member States experts. I believe that this combination of measures will ensure that only eligible expenditure incurred in accordance with the relevant legislation is supported. I know that Parliament will be especially insistent on this point and you have my assurances that this will be the case.

Already, concerns have been expressed at the current financing arrangements for dealing with animal disease outbreaks of this nature. The expected expenditure last year was of the order of €43 million, a figure which has been surpassed by a factor of ten. One issue which has been raised is a possible insurance scheme.

The Commission has the intention to launch a study shortly to look at such a possibility. The Spanish Presidency also intends to submit a memorandum on the financing possibilities, possibly at the Agriculture Council next month.

Economic Impact

We are all aware of the wider impact of the crisis. Farmers, especially in the affected areas, clearly bore the brunt of the crisis. However, the impact was also strongly felt by other sectors of the rural economy and in particular tourism. The full impact of these costs has been estimated by the Member States concerned.

The impact on the EU budget arises only in respect of the expenditures provided for in relation to the eradication costs and certain associated market support measures. As I pointed out a moment ago, these costs are still being assessed. For the moment, the most that can be said is that the budgetary provision is of the order of €800 million.

The question of compensation from the EU budget for the losses arising to the non-farming sector has not arisen. It appears that this is a subsidiarity issue which Member States prefer to keep within their own range of responsibilities. In any event, given the nature of EU expenditure, it is not clear if and how such compensation costs could be financed within the existing financial arrangements.

Next Steps

The question now arises: what happens next? The proposal which the Commission will present shortly for a new Directive on the control of FMD will provide the opportunity for a full debate on most of the key issues. The current approach towards vaccination in particular will be up for review.

This proposal is now more or less finalised within my services. The intention is now to have it translated and put to the College in the coming weeks. I hope that it will be widely debated in both Council and Parliament and that we can agree a consensual approach towards the future handling of FMD.

The Commission's intention is, by mid 2003 at the latest, to have a new strategy in place which will learn from the lessons of last year. To repeat the objectives I highlighted at the recent International Conference on FMD, we must aim for the following:

Strengthening our defences against further outbreaks. This will require more effort and resources to tackle illegal imports of potentially contaminated products.

A livestock population which is managed with the prospect of infectious diseases like FMD in mind. This objective will require improved identification and traceability and more restrictions on animal movements.

Improved surveillance and control measures to ensure that outbreaks are spotted quickly and that decisive action is taken to eradicate them before they take hold.

Revised contingency plans which take on board the lessons of the recent outbreak and which provide for a more inclusive response to any future outbreaks.

The exploitation of the new tests to ensure that vaccination is a more effective tool in combating FMD and that the unnecessary slaughter and destruction of healthy animals can be avoided.

A more coherent international framework, working with the OIE in particular, which allows trade to take place but also takes account of other legitimate concerns, including enlargement.

I would like to close with one very important observation. Whatever one's views of the handling of the crisis, one fact is now evident. There was a remarkable degree of solidarity between the Member States in eradicating the outbreak.

No Member State sought to exploit the crisis to its political advantage. No Member State sought to exploit it for trade or commercial advantage. No Member State sought to break the consensus in approach.

This was one of the more positive aspects of the crisis: the solidarity in approach. All the key Commission decisions over sixty of them received a favourable opinion from the veterinary experts of the Member States. These decisions were all implemented effectively and quickly.

There was virtually no recourse to national measures and thus none of the conflicts between national and EU law which were an unfortunate feature of successive BSE crisis. The FMD outbreaks, for all the tragedy and damage involved, served nonetheless as a excellent example of the Member States acting together constructively in their collective interest.

I take great personal satisfaction in the Commission's role in, first, building and, second, maintaining this consensus. The officials of my Directorate General displayed a remarkable degree of professionalism which is widely recognised. I hope that when you present your report that you will also recognise this professionalism.

I look forward Mme President to the report of your committee. It is my intention that it will feed directly into the discussions on the draft directive.

I recall your very constructive role in relation to the Council Directive Swine Fever where you acted as Parliament's rapporteur. There are clear synergies between FMD and swine fever and I hope that we can benefit again from your experience in the discussions which lie ahead.